Hold Oberoi Realty; target of Rs 333: ICICI Direct

ORL’s sales volumes slumped 89.6% YoY to 1.06 lakh sq ft in Q3FY17 due to a higher base in Q3FY16 when SkyCity project was launched. Sales volumes were boosted by SkyCity and Esquire projects where it managed to sell 35780 sq ft & 28016 sq ft, respectively. However, sales volumes for other projects were under pressure post demonetisation.

OutlookWe like ORL given the quality of land bank, its healthy balance sheet and management bandwidth to execute large projects. Though a pick-up in sales volumes was seen in Q2FY17, volumes have again dipped post demonetisation. Hence, we await an improvement in sales volumes, going forward. Further, the sales momentum has slowed down across ORL’s project portfolio with muted bookings in most projects. Hence, we continue to maintain our HOLD recommendation on the stock with a revised target price of Rs 333.